National Grid seeking 53-percent rate hike

Under the proposal, the average monthly bill for homeowners would climb from $89.06 to $106.19.

PROVIDENCE — Most electric users in the state will see a considerable increase in their bills in October under new rates proposed by National Grid.

Rhode Island’s largest electric utility filed a proposal with the state Public Utilities Commission earlier this month that calls for a 53-percent increase in the standard-offer service rate for residential customers, from 6.3 cents a kilowatt hour to 9.5 cents. The new rate would go into effect for the billing period from Oct. 1 to March 31, 2018. Under the proposal, the typical customer that uses 500 kilowatt hours a month would see their monthly bill climb from $89.06 to $106.19.

The rate increase only covers the cost of power, which National Grid is not allowed to profit from under state law. Power costs make up about half of a customer’s bill. The other half covers delivery charges, which National Grid is allowed to profit from — though the company is not proposing to increase that in the current proposal.

Ted Kresse, a spokesman for National Grid, attributed the rate increase to high prices in the regional energy market managed by Independent System Operator New England. ISO-NE holds auctions to ensure a power supply for the region three years before it’s needed. Excess capacity kept prices down until the auction to secure capacity for 2017-2018, when there was a deficit in resources.

“Several major power generating plants in New England have been retired recently, including Brayton Point, Vermont Yankee and Salem Harbor, just to name a few,” Kresse said in a statement. “When these facilities go off-line, the region goes from having a capacity surplus to a capacity shortfall, creating an increase in capacity prices.”

ISO-NE has estimated the total cost of the capacity market in 2017–2018 at about $3.1 billion. In the seven prior auctions, the total cost ranged from about $1.1 billion to about $1.8 billion.

If National Grid’s proposal is approved, it would be the first increase in rates for the company’s 486,000 electric customers in Rhode Island since January 2015, when wholesale energy prices spiked on the back of New England’s dependence on natural gas for power generation and heating. Rates have been falling steadily since then, and the proposed residential rate that’s before the PUC would be the highest in two years.

National Grid divides its electric billing cycles in Rhode Island into two per year. Typically, rates are higher in the cold-weather period, from Oct. 1 to March 31, when electric generators pay a premium for natural gas because of increased demand for the fuel as a heating source. Rates are usually lower in the warmer period, from April 1 to Sept. 31, when heating needs go down.

But that pattern hasn’t held over the past two winters because of milder-than-expected temperatures. In fact, rates for all of 2016 were generally down throughout New England as the lowest natural gas prices since 1999 drove wholesale electricity prices to their lowest point since 2003, according to ISO-NE.

The trend of rock-bottom prices continued through most of this year. The price per kilowatt hour dropped by half a cent last October. And it dropped again in April, by nearly 2 cents, to the current 6.3 cents a kilowatt hour, the lowest it’s been in at least six years.

But the tide may be turning. Because of the dips and bumps inherent to the summer-winter billing cycle, it’s no surprise that the rates that would take effect in October are higher than those in place already. But they are also higher than the rates consumers paid in the past two winters — 16 percent more than last winter and 7 percent more than the winter before.

Camilo Viveiros, coordinator at the George Wiley Center, the Pawtucket-based advocacy group for low-income Rhode Islanders, said National Grid needs to create a Percentage of Income Payment Plan, or PIPP, to allow electric users who are struggling with high costs to pay only what they can afford.